AML 'oversights' push up agency fines - claim

The average anti-money laundering (AML) fine issued to the estate agency sector for non-compliance has started to climb, reversing the previous downward trend seen throughout the pandemic, research suggests.

Analysis of the first quarter of the 2022/23 financial year by Credas Technologies shows that the average AML fine issued to estate agency businesses by HMRC is sitting at £3,815. 

This marks a 6% annual increase but is the second lowest since 2018/2019. 

Total fines in the first quarter of the financial year hit £304,023, equating to 44% of total fines seen in the previous financial year in just a single quarter, the AML platform said.

Estate agents continue to account for the largest number of AML fines issued by HMRC since the introduction of AML supervision, according to the research.

The sector accounts for 45.4% of all fines issued, followed by accountancy service providers (41.1%) and money service businesses (4.6%).

Since 2017, estate agents have also paid the second largest overall penalty sum of £1.6m. Only the money service businesses sector has been more heavily fined at a total of £4.7m, while accountancy service providers rank third with total fines valuing £510,000. 

However, during this time the average AML fine issued to the estate agency sector sits at £3,711, just the fourth highest of all sectors. 

Tim Barnett, chief executive of Credas Technologies, said these figure suggest while the sector may have been subject to the most fines, the reasons behind these fines aren’t as severe as those issued within some other sectors. 

Barnett said: “At first glance, it might appear that estate agents are failing to get on top of their AML responsibilities. The sector ranks high both in terms of the total number of fines and their cumulative total, but the situation is more nuanced than the data might suggest.

“The majority of these fines are due to oversights rather than intended money laundering practices, with estate agents tackling a large number of transactions day in, day out, and this is evident given the fact that the average fine issued isn’t as severe as many other sectors. 

“However, we have this average fine starting to creep up ever so slightly and this is no doubt due to HMRC’s promise to crack down on illicit activity within the property market. 

“While the sector has done an outstanding job at adjusting to the implementation of new AML regulations while tackling the pandemic property market boom, it can ill afford to take its foot of the gas.”